Can a seller help a buyer with their deposit?

theoretica

I remember seeing adverts some years back from developers offering 'gifted deposits' - and that many of the issues raised above applied.  Lenders didn't really like them, but they inflated the on paper value of the property (so more stamp duty, reduced resale prices). 

Francis63

MaryNB said:

Francis63 said:

Slithery said:

Francis63 said:

The vendor is simply willing to lose £15k for a quick sale and a sure sale (no chain)

What makes you think that selling to a FTB will be 'quick and sure'?

There are plenty of sellers who wouldn't even consider a FTB unless it was there only option due to how slow and unsure they are as buyers due to never having been through the process before, having unrealistic expectations and panicking about the tiniest things brought up in a survey,

I think if someone is willing to pay your deposit for you (or a large chunk of it) as a FTB you would not want to back out on a whim. It could be your only chance. 
As I say, I was lucky enough to start off on a 100% mortgage, without that where would I be? If this option came up I'd chew the sellers arm off trying to get that first house.

I realise your intentions are good but the FTB might back out once struggle to find a lender that will accept it. That will be the deciding factor for many. 

Check on the Mortgages and Endowments board. There are brokers there who may be able to give you an idea of how feasible it is.

They'd just have to find the lender first....

user1977

Francis63 said:

user1977 said:

Francis63 said:

Slithery said:

Francis63 said:

The vendor is simply willing to lose £15k for a quick sale and a sure sale (no chain)

What makes you think that selling to a FTB will be 'quick and sure'?

There are plenty of sellers who wouldn't even consider a FTB unless it was there only option due to how slow and unsure they are as buyers due to never having been through the process before, having unrealistic expectations and panicking about the tiniest things brought up in a survey,

I think if someone is willing to pay your deposit for you (or a large chunk of it) as a FTB you would not want to back out on a whim. It could be your only chance. 
As I say, I was lucky enough to start off on a 100% mortgage, without that where would I be?

And why do you think 100% mortgages aren't available any more?

But this won't be a 100% mortgage

So is there any equity actually being put in by the buyer? If not then it is a 100% mortgage.

Francis63

theoretica said:

I remember seeing adverts some years back from developers offering 'gifted deposits' - and that many of the issues raised above applied.  Lenders didn't really like them, but they inflated the on paper value of the property (so more stamp duty, reduced resale prices). 

Yes, we posted a similar thing at the same time   :

Were I a FTB, getting nowhere trying to save for a deposit, and having to pay a high private rent, even in the worst case scenario of 'more stamp duty and reduced resale price' as you say above, it would STILL be far preferable to get on the ladder than the status quo of rent down the drain. 

You gotta live somewhere.

Francis63

user1977 said:

Francis63 said:

user1977 said:

Francis63 said:

Slithery said:

Francis63 said:

The vendor is simply willing to lose £15k for a quick sale and a sure sale (no chain)

What makes you think that selling to a FTB will be 'quick and sure'?

There are plenty of sellers who wouldn't even consider a FTB unless it was there only option due to how slow and unsure they are as buyers due to never having been through the process before, having unrealistic expectations and panicking about the tiniest things brought up in a survey,

I think if someone is willing to pay your deposit for you (or a large chunk of it) as a FTB you would not want to back out on a whim. It could be your only chance. 
As I say, I was lucky enough to start off on a 100% mortgage, without that where would I be?

And why do you think 100% mortgages aren't available any more?

But this won't be a 100% mortgage

So is there any equity actually being put in by the buyer? If not then it is a 100% mortgage.

Yes, there is. The gift from the vendor. 

That's the whole point - the equity is there. 

Gifted to the FTB instead of an 'express agency' type shark, out of preference.

Gavin83

Even if lenders did accept this I can't see many vendors agreeing. For this to work the house would have to be fairly priced to start with to avoid down valuations. You'd then have to find a vendor who was willing to accept 10% (or whatever figure) less than this fair price to gift it to a FTB. Given most houses at the moment are going for over asking, especially if fairly priced and even more are at least getting asking price it's likely this FTB offer would be low down the list of offers. Therefore you're essentially asking the vendor to gift a large sum of money to a FTB, who is likely to be a complete stranger. This is ignoring my earlier comment that until the house is actually sold most won't have this money free anyway.

Even ignoring the lender issue I think you're grossly overestimating the number of vendors who'd be willing to do this. It would be such a tiny number it wouldn't even be worth implementing the scheme.

MaryNB

Francis63 said:

MaryNB said:

Francis63 said:

Slithery said:

Francis63 said:

The vendor is simply willing to lose £15k for a quick sale and a sure sale (no chain)

What makes you think that selling to a FTB will be 'quick and sure'?

There are plenty of sellers who wouldn't even consider a FTB unless it was there only option due to how slow and unsure they are as buyers due to never having been through the process before, having unrealistic expectations and panicking about the tiniest things brought up in a survey,

I think if someone is willing to pay your deposit for you (or a large chunk of it) as a FTB you would not want to back out on a whim. It could be your only chance. 
As I say, I was lucky enough to start off on a 100% mortgage, without that where would I be? If this option came up I'd chew the sellers arm off trying to get that first house.

I realise your intentions are good but the FTB might back out once struggle to find a lender that will accept it. That will be the deciding factor for many. 

Check on the Mortgages and Endowments board. There are brokers there who may be able to give you an idea of how feasible it is.

They'd just have to find the lender first....

Yes. But what if your FTB is self employed? Or has a default from a few years ago? Or is relying on bonus as part of their LTI assessment? You might find a lender that provides a vendor backed mortgage (unlikely from a quick scan of older posts on the Mortgages & Endowments Board) but there may be other criteria to fulfill. Also from what I've read the % gift may be limited to something like 5%. A lender may still want a contribution from the buyer. A buyer with no decent savings may not be seen as a financially low risk customer. 

It might not be hard no on your idea but there are many many barriers. 

Francis63

Imagine the business a lender could get if they could get their heads round this and offer it. 

I think they'd be inundated!

And the housing market would do well, govt happy with sales as means more stamp duty, equally estate agents happy. FTB's happy. 

Private landlords would be the losers here.

MaryNB

Gavin83 said:

Even if lenders did accept this I can't see many vendors agreeing. For this to work the house would have to be fairly priced to start with to avoid down valuations. You'd then have to find a vendor who was willing to accept 10% (or whatever figure) less than this fair price to gift it to a FTB. Given most houses at the moment are going for over asking, especially if fairly priced and even more are at least getting asking price it's likely this FTB offer would be low down the list of offers. Therefore you're essentially asking the vendor to gift a large sum of money to a FTB, who is likely to be a complete stranger. This is ignoring my earlier comment that until the house is actually sold most won't have this money free anyway.

Even ignoring the lender issue I think you're grossly overestimating the number of vendors who'd be willing to do this. It would be such a tiny number it wouldn't even be worth implementing the scheme.

I agree. Once they see how much they need for their onward purchase their generosity might fade. Also at the moment demand is so high they'll have so many people bidding they won't need to sell below asking to get a buyer in fast. Many houses in my area are fully booked for viewings before they're even listed online. House prices just keep rising and rising. This might only work for people downsizing (and not doing for the purpose of freeing up some money for themselves) or selling off property they don't live in. 

Francis63

MaryNB said:

Francis63 said:

MaryNB said:

Francis63 said:

Slithery said:

Francis63 said:

The vendor is simply willing to lose £15k for a quick sale and a sure sale (no chain)

What makes you think that selling to a FTB will be 'quick and sure'?

There are plenty of sellers who wouldn't even consider a FTB unless it was there only option due to how slow and unsure they are as buyers due to never having been through the process before, having unrealistic expectations and panicking about the tiniest things brought up in a survey,

I think if someone is willing to pay your deposit for you (or a large chunk of it) as a FTB you would not want to back out on a whim. It could be your only chance. 
As I say, I was lucky enough to start off on a 100% mortgage, without that where would I be? If this option came up I'd chew the sellers arm off trying to get that first house.

I realise your intentions are good but the FTB might back out once struggle to find a lender that will accept it. That will be the deciding factor for many. 

Check on the Mortgages and Endowments board. There are brokers there who may be able to give you an idea of how feasible it is.

They'd just have to find the lender first....

Yes. But what if your FTB is self employed? Or has a default from a few years ago? Or is relying on bonus as part of their LTI assessment? You might find a lender that provides a vendor backed mortgage (unlikely from a quick scan of older posts on the Mortgages & Endowments Board) but there may be other criteria to fulfill. Also from what I've read the % gift may be limited to something like 5%. A lender may still want a contribution from the buyer. A buyer with no decent savings may not be seen as a financially low risk customer. 

It might not be hard no on your idea but there are many many barriers. 

I agree with most of this. 

Plenty of would be FTBs aren't self employed though. Their main stumbling block is the ability to get enough deposit and they can't save faster than house prices increase. 

It is unfair on FTBs; and that is recognised. Hence the various govt-backed schemes. Perhaps the govt could help back this under certain criteria.